Gov’t courts support of commercial banks on Treasury Single Account

Government has appealed to all the commercial banks to lend their support to help government implement the Treasury Single Account (TSA) policy successfully.

“I wish to appeal to all the commercial banks to lend their support as they always do to help Government implement this policy successfully for the long term benefit of the nation,” Vice-President, Dr Mahamudu Bawumia has said.
Government has indicated its commitment to fully implement the Treasury Single Account (TSA).

However, the Ghana Association of Bankers wants the government to reduce the reserving requirement from 10 to 6 percent.

The reserving requirement is the percentage banks pay on deposits collected from customers.

Although, Mr Alhassan Andani, the President of the Association of Bankers, said they were in full support of the TSA implementation, but says 10 percent is on the high.

“The Bank of Ghana wants us to send 10 percent of reserving requirements and that is too high. I believe it should be reduced to limit the shock of liquidity that the TSA will bring to banks.”

But, government has again cautioned commercial banks, which are likely not to cooperate with the implementation of the Treasury Single Account (TSA), to come on board or risk shutting down.

According to the Public Finance Management Act (PFMA), which establishes the TSA, the initiative is to serve as an account into which all government cash including monies received by covered entities shall be deposited and from which all expenditure of government and entities shall be made, among other demands.

Local banks have claimed inability to comply with government’s directive to transfer monies held by government entities with local banks to the Central Bank under the TSA.

The TSA, according to Finance Minister Ken Ofori Atta, will ensure a robust macro-economy and so needs a collective effort at implementing it.

He noted, it is essential to have all banks on board given cost of interest on domestic debts.

Mr Ofori-Atta has, meanwhile, said banks which do not comply are likely to be shut down.

“There are a lot of penalties the banks can face. But we are hoping that we will all put our shoulders to the wheels and get this running,” he said, “but banks who do not comply will risk having the Central Bank shut them down.”

Dr Bawumia has indicated that, after a number of attempts by successive governments over the years to implement the TSA, the current government was determined to do it.

However, he said government alone could not do it and called for support from stakeholders, including the commercial banks to ensure the success of the policy.

“I wish to appeal to all the commercial banks to lend their support as they always do to help Government implement this policy successfully for the long term benefit of the nation,” Dr Bawumia said.

The TSA, which is a unified structure of government bank accounts, enables consolidation and optimum utilisation of government cash resources.

It is a set of linked bank accounts through which the government recognises all its receipts and payments and obtains a consolidated view of its cash resources at the end of each day.

Dr Bawumia said the goal of the TSA was not only meant to give government a consolidated view of its cash resources but to ensure efficient treasury management as required under the cash management reform initiatives.

Mr Ken Ofori-Atta has said the launch of the TSA followed the commitment of government to enforce the Public Financial Management Act, 2016, which established the TSA.

He said the transfer of the bank accounts of all government institutions to the Central Bank was to ensure the ease of management and monitoring.

An estimated GH¢5 billion were with the commercial banks as government deposit.

He believes pulling these resources into the central bank would reduce the risk of resorting to central bank overdraft for government expenditure and would reduce the cost of building buffers for cash management purposes.

Mr Ofori-Atta said the implementation of the TSA in the first phase would not cover State-Owned Enterprises that borrow on their own balance sheet. He said those institutions would continue to do business with the commercial banks.

The Minister said so far instructions had been issued for the transfer of bank account balances belonging to nine out of 24 Ministries, Departments and Agencies.

“Out of 190 accounts of the nine MDAs (Ministries, Departments and Agencies), bank balances standing in 36 of these accounts have been transferred to bank of Ghana,” he said.

He said, as at August 7 GH¢89.668 million has been transferred from the commercial banks to Bank of Ghana.

Mr Ofori-Atta said the TSA would eventually lower actual borrowing and reduced pressure on short-term yields and ensured that MDAs funding needs were met in a timely manner for efficiency and effectiveness.

There are fears that the implementation of the TSA might cripple the operations of the commercial banks, which have called for a phased implementation of the policy.

However, Mr Eugene Ofosuhene, the Controller and Accountant General, said the adoption of the TSA would not have any adverse effect on commercial banks.

“I can confidently say that pre-feasibility studies and impact assessment that have been conducted prove that the Commercial banks will not be significantly impacted both on the aggregate level and on individual basis,” he said.

Source: Adnan Adams Mohammed

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